Earnings call transcript Q2 2023

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Operator

Good day everyone, and welcome to the Sonos Second Quarter Fiscal 2023 Conference Call. At this time, all participants are in a listen-only mode. Later we will take your questions. [Operator Instructions]

And now I would like to hand the call over to Mr. Investor of Head Baglanis, Relations. James sir. Please go ahead,

James Baglanis

CFO quarter Good conference earnings me are Spence; second Lazarus. Officer, Baglanis. afternoon, welcome to today and Patrick CEO, and fiscal Sonos' Chief call. with Legal Eddie XXXX And Sonos and I James am

For in earlier, hold collaboration of at in a the with music Spices station, Asian call Sweets recognition Islander from API our and joined month. and which those is who today's sampling is Pacific curated Sonos

also Patrick, and I these of today's material statements to any that to like fully financial Before to These forward-looking factors subsequent SEC. reflected be risks to that materially I are of over views date. cause detailed today could hand the These everyone our the Risk from would statements discussion discussion risk the uncertainties not of should statements in considered remind it A as differ performance. and Factors with our reflect expectations regarding results our in as actual include only caption views will filings is representing under statements. future and events forward-looking future our subject

non-GAAP During will we refer to measures. this certain call, financial

a reconciliation of our please website. For information our regarding the Relations portion GAAP fiscal to Investor non-GAAP financials to XXXX to non-GAAP quarter regarding measures, today's second of and refer our release press results posted

supplemental to be Relations transcript convenience, would an As presentation. which earnings on our presentation the like call for note and will of Investor certain available also portions website, separately we that reminder, Relations a press Investor posted our contains supplemental investors.sonos.com. to earnings release, our investor conference have website, I presentation,

to the turn call now Patrick. will I over

Patrick Spence

James. hello, And Thank you, everyone.

cities. did of a Era with the software favorite groundbreaking offers Era design best Next stereo a speaker and Sonos deep and was delivers and detailed hardware Atmos. spatial executed XXX and simultaneously. best new all launch we revolutionary your launching sound Dolby out in that XXX. This tale experience content biggest is with our audio two and is next Era our by that Gen featuring something generation two for quarter one, bold, products and acoustics history, new XXX new the of selling most listening Era successful We loud the XXX base.

killer announced also only audio first We spatial global XXX, partner on to product Era speaker WIRED of here Sonos ahead Era calls GQ is excellent Sonos smart Apple and launches storm. standard the and These scores is audio Both Music. revolution. expectations. that XXX industry to Apple the and Music's customer the access took consumers kick-start speaker said a media new selling XXX, speaker the by spatial are magazine boast and Era offering of review and products

Era leading the products to fuel that XXX, and years Era raised in in categories team play we XXX innovation will our come. our for with to commitment bar the Our reinforcing and creating flywheel

customers the to consumers no a easy technology that leading top software-as-a-service also audio to for we entered with business a great many We're for Sonos we've fiscal And tremendous that the category opportunity the believe sectors different. for We've on services as for will across industry of our be consumerization We and Pro. customers. industry seen to is those making to We everything and serve offering learned offerings. XXXX step introduction take Sonos have so of another and of as businesses it customers. a opportunities leverage of this prefer We create approach. for hardware reliable the explore course, new audio a their service built their towards experience we

second intensified in half as term and pressures, throughout diminished our macroeconomic we near we expectations. fiscal and all have the flagged year progress, even made full XXXX But have this of QX

trends While half second first observed met of us our underlying the results the partners year, tightening has up generally demand conjunction quarter. that our we This the reduce softening inventory the expectations for outlined the fiscal some our channel in led on remainder financial we outlook with to in XXXX. of for have softening of

we're the challenging XXXX decline revenue disappointing our year, and this guidance is X%. constant this We but Specifically, knew currency be of taking inconsistent resulting our down fiscal with a a that ambitions. in at X% midpoint, year-over-year would

our further to explain QX I'd take February. like to since in earnings fiscal what a moment changed

First, pronounced sales we in to run that March. see US softening through March. February, The showed registration continued exiting the market began in we a decline holiday track which data period, rate trends theater in home

While market home very theater the remains European challenged.

are share Our category weakness. deep still customers despite we immune audio Sonos QX choosing competitors the not offering. in But widespread theater competition to the gains that ultimately, that discounts are show the are legacy over home

we of lower clear supply and fiscal channel channel our on through being to have after of majority of our quarter were Second, inventory XXXX. XXXX, other installer this constrained level existing to dealers work begin weeks oriented and the and rather than hand we prior the Since most replenish in fiscal key and doing products trend seen maintain reorder backlog the of in able so, levels. toward a for first Amp vast

tighten our effect open healthy exited of retail cumulative retail we unfortunately are seeing three channel is holidays our The to significant six positions with buy their revenue some of the over to we EMEA in these partners relatively and developments dollars. Third, inventory up expected months. while the next a position, reduce

performance deviate the if That's what adapt to hesitate necessary to we to heard of profitability you business. take our doing to to do. are will from past our protect not the and have environment and Now, us actions quarters say would in we continue our expectations, we that started

to XX% with deliver expenses still this EBITDA to so X.X% manage guidance. We are our swift margin we year that taking action an adjusted can consistent prior

all a commitment do rigor to of two because efficiency. the and investing focus been opportunities see But times heavily long-term. We've the years we renewed require last over over harder the

reduce on We ambitious to provide staying our will spending our will more on this while Eddie shortly. deliver track roadmap. detail

we profitable into sustainable, over the innovate growth new driving existing remains our focus five continue and in three long-term as Our categories. expand categories to

We are of represent early our the than our X% million in growth our million of more innings households households markets. affluent XXX in just as XX the core

of At underscoring lot the to end years, average products household had growth. customers of X.XX grow, the X.XX year. Sonos up prior over and lifetime steadily fiscal there's increased figure XXXX, continues for more the the has the from room additional value a our how This

that the six In discussed four are other revenue our X.XX opportunity. converting previously Sonos we have to XX% get to starting household our into of for household existing products. households average household. product single words, has we install past, size the multi-product noted our single $X multi-product to We households every in of we estimate the mature are households, represents whereas As have billion average range products a product

this further will course, our Of long does monetize install not the that happen have it but to highlight base. runway we overnight,

will in and continue more invest beyond. systems opportunity aggressively fiscal to this We the go in and to after XXXX programs

new home right flywheel. launch raised fuel in of and to investors The Sonos that I remain deliver was on the Era confident the speakers a value over bar our long-term. that the generation customers track continue and and for to incredible is ushers will

into actively us Pro a And and steps whole categories. are revenue. on exciting recurring we software-as-a-service new products us new category working in and into gets Sonos three

of There's in billion our EBITDA. no to and in in on period this mind that will delivering company million we adjusted $X.X doubt toward a from targets long-term resume my progress and stronger emerge million revenue $XXX as making $XXX

the turn call provide more and on our our details outlook. I'll Eddie Now results to over

Eddie Lazarus

you, Thank Patrick.

guidance, echo emphasize our our I Patrick performance second disappointment Before discuss the expectations. details I to want in and downwardly and QX our half revisions our of to revising

resilient partner Emergings from conditions would after has our anticipate pandemic did the first business and visibility And sufficiently circumstances and not consumer in how swings quarter, in these engendered we fiscal affect into short-term. behavior. the our sharp

fiscal to to make strong This fiscal navigate expense to while enable priority a investments foundation top size evaluating delivering setting our base XXXX, is remainder product of we roadmap targeted leverage. our As us right how operating for my in XXXX. means the

in revenue. the said financial while to keeping is achieve It in our of expenses As fiscal growth line our order call, check in long-term top not targets. excess growing importance reaccelerate of are quarter I we business fourth critical to of in OpEx XXXX in

fiscal Now revenues turning constraints constant of down ahead to $XXX.X million, due XXXX of and On previously from our XX% of of We fill. channel to QX reported supply QX. but was which Recall revenues declined chronic anomalous to currency fulfillment XX.X%. stemming was basis, QX XX.X% that slightly a expectation, XX% timing the decline. outlined backlog year-over-year,

to due affecting fiscal Quarterly I products while fill year-over-year, X% just sold favorable declined channel sold registrations that backlog based products QX XX%. comparisons on declined factors and of XXXX mentioned. Quarterly the

this smooth is to a year and back Looking comparisons, are respectively. registrations whereas quarter's to QX reported fiscal further revenue X% down products of down sold and X%, X%, XXXX

more by headwinds. and than due declined to mix registrations products shift FX adverse and product Revenue sold

macroeconomic home performance We becoming run the factors softening the was quarter of increasingly pressuring quarter. theater trends saw in registration demand. overall rate are our are multitude registration the We So competitors broadly declining solid. and A category steadily attribute throughout to promotional. this

lower weakness. assumes but to the run extrapolated to throughout see Accordingly, into that demand will further We not second pleased QX, guidance, category are which theater in widespread gains have we home in immune are year. these of our share rates the the we half soften

replenishment around IS work channel inventory. that registrations down of ahead are We of as now our through will year into installers sell-in assumptions have the run the end changed assuming the we also where channel

of being the prior would that Our higher after undersupplied installers at and levels assumption pandemic. throughout been operate maintain had inventory

on to a resulting constant contraction a more the Gross XX in Gross due FX. components in an theater end reserve in sequential than less gross basis quarter. from basis. to This expected and a revenue in declined product improvement XX.X% QX, currency basis XXX gross home but by the we and in on a see, weakness increase margin, point basis mix than XX% dollars due primarily margin declined products to XX% profit reported life to profit related category, point dollars given a year-over-year inventory of adverse represents excess

Excluding the gross XX.X%. approximately impact was FX, of margin

we negative quarter. due actions expectations our the initial Adjusted that to million $XX.X take of EBITDA ahead to considerably which to declined Patrick intra mentioned, began cost

to EBITDA. headwind million $X adjusted approximately an was exchange Foreign

soften, slowed of to how offset second the demand Total quarter seasonality accrual worked of by typical expense. to $XXX non-GAAP When and last see of delayed declined lower spend, million the half. in due to spend we began some shortfall $XX.X or hiring we XX% marketing sales expected program million to and operating revenue while identify delayed program we expenses and bonus from our pace

office in usage our took Barbara we of Santa right We real and to transition both also out Seattle as in pandemic. changes steps footprint light in the size estate of

ended and as million by were cash inventories, finished well the in the of of was with and $XXX quarter million $XX debt. increase cash a million as in no inventories. sequentially. the $XXX accrued decrease a X% million, largely Within accounts X% million, in $XXX payable At our $XXX We Free up negative sequentially. was flow expenses, driven balance inventory the million end quarter, goods up quarter, $XXX

sequentially. was Our XX% up component balance of $XX million

The I conversion reduction expectations But improving have inventory cash disrupt run term, priority. cash adversely as half the between will and in second in a trends previously, affecting rate the revenue free near top said sales remains harmonization flow.

representing price we as of before finally, the million QX. of of to $XX.XX in common X.X% stock at shares average repurchase outstanding of $XX quarter And turning share, an per guidance,

million As a on $XXX our remaining approximately $XX have authorization. share previous repurchase we million reminder,

to guidance. turning Now

profitability intra we the As expectations channels Patrick mentioned, for our our in year. us changes maintain observed the in to To demand back able both EBITDA this, decisive to quarter, requires that developments we and adjust expense to are protect full base adjusted half taking are we margin action the prior of significantly year our expectations. our revenue reduce and mitigate such

the base approximately plan new assumes our midpoint. by $XX million fiscal XXXX expense at operating will that Our we be reducing

positions, open We slowing savings program of restructuring spend, combination through a some planned these reduction, hiring, of and will teams. bonus eliminating achieve reduced

of full $X.XX between X.X%, X.XX revenues On X.X% currency. X.X% dollars now report to -- sorry to to and and revenue, $X.XXX decline constant -- This X.X% year billion billion. represents or year-over-year expect we million a

point million approximately million in guidance than or expected. less Our headwind, a X.X FX $XX previously $XX bakes

as follows; assumptions the $X.X at at pound Our $X.XX. are FX and the revised Euro

fiscal in four As was is FX our a euro our to EMEA reminder, XX% sensitivity one revenue of to pound. XXXX, and about

million At XX% Based guidance. the Inclusive million FX the our or in on first represents a XX% results million. developments, prior $XXX implies the revenue a outlook our year, reduction the midpoint, to this of second million represents half reduction or this $XXX guidance. $XXX this of to half of favorable $XXX to prior

guidance As Patrick partner inventory; one, softening outside a installer in are, outlined dealers targeting level inventory levels the factors the call, our of channel at our particularly demand; in three of EMEA. rate reduction in tightening, the lower expected and of two, run three, retail than solutions

estimates and now run reduced will channel have adjusted are half of assuming reflect We our level our these second rate that our outpace sell-in. factors to registrations

On gross margin to XX.X% we the now margin, expect be in of will gross XX.X%. range

XXX margin implies FX gross Our At half a second approximately of margin this basis half year. assumption -- headwind the to approximately points for revised XX%. headwind to outlook translates an second gross gross midpoint, the

market activity, observed buys FX headwind. and component first promotional fewer in We lower margin logistical improve reduced due expect lower from gross spot range to XX% the to half and costs, on a the to XX%

On we prior XX% represents expense the million actions EBITDA guidance, to of to to we our taking, reducing of $X.X full a midpoint margin $XXX Though from XX%. a million, of decline are be $XXX million year be the range to in our X.X% EBITDA, $XXX representing unchanged. adjusted the light range slightly expected will of is adjusted million X.X%

As previously EBITDA. adjusted significant FX of headwind reduces flows portion through discussed, the and a

our approximately amount year guide. our million to full reduction We adjusted now expect a $XXX operating million, from to non-GAAP expenses previous approximately $XX of

timing increase replenishment channel XX%, the of ahead expect by consistent Looking QX primarily in driven QX, in to a with to of we XX% seasonality. typical revenue sequential ranges

margin. load and digit primarily We improvement in single from -- QX, non-GAAP adjusted operating adjusted sequential product to -- margin mid resulting for for mix expect non-GAAP product to the to gross and for mix positive due in -- adjusted $X by million, and expenses $X to a adjusted EBITDA increase million to sorry

long-term. industry in be successful to Despite is mind over no there headwinds, the that Sonos doubt the short-term positioned well my is

exciting will in operating deliver ensure can right We the continue in to expenses decisions making to our roadmap, we XXXX. while on operating product invest year that leverage fiscal

least, our not this litigation, earlier kicked on briefly touch trial Northern but Last California week. Google off to in our

comments, pending, the is we of matter making we but provide appropriate. while a an As will be policy trial when additional won't update any

With call like the turn that, I'd to over to questions.

Operator

[Operator Instructions]

Morgan We'll from Stanley. take our Woodring, question first Erik

Erik Woodring

making any circle points question. like we the Hey, if seeing guys. if we necessarily inventory that inventory. the for I months I here confident impact and you these Thanks the to channel on less open afternoon good rewind weren't seeing three whatnot, guess obviously to you very taking buy ago, weren't just to of that you're seeing feel guys were dollars,

you the then think got kind just So my say, even and I have is, and in on or and a second. up. months there, breaks kind I the I'm three channel changed a your what feedback have maybe of do that well, put in curious March the you guess question follow some February to partners hold of last dealer partners of and

Eddie Lazarus

financial extremely knew of always a the And demand. living difficult happened year. to we've retailers electronic change what a in the would And things in number difficult very, of in run external spot. think times. things to a been quickly. there's softening quickly. space, we're housing so of our whether factors. that variety across from channel, market's And very that's a changed quickly. this now consumer be was categories, IS of a have Eric, In it. question rates, the name We certainly EMEA, a there But in in respond And that seen, The other a you going things crisis mean, banking I uncertain default, I be Well, to

in bit. so have to demands QX, With again, it they interest to rates, the it increase but fiscal down And our channel since a they had in there decided much the down. inventory, hold replenishment that work not appears

that But consumer rapidly. we've in factored new a you pretty guidance. environment we things always you so things wish our seen And But changed a live had little so and of into that have quicker. volatile all

Patrick Spence

the it, think headwinds of nailed Yeah. on the I at industry Eddie just day. I layer there, would end

And thing is how the XX% seeing we anywhere to to And what's these sales up so happening we're gaining in to of doing declines holding even well, and the from situations, of categories year-over-year in type relative back these situations. go the we out there? situations are X% in that compete. we And we're some share

XXX I think the brand, XXX well the And with short-term Era feel you've for headwinds and industry so innovation us like long-term. these blowing we're Era I But our seeing strongly. positions really seen

Erik Woodring

Sonos any maybe, that And to ramp this kind can long to That time, years Is one love type for of guidance model for Patrick, the or for or color be pushing the you your opportunity. from you then to how think Thank super any how so the trajectory about provide on maybe you incremental or the time? type can the And monetization launch, solution? the that's just of Okay. right you helpful three this about much. And that. now Is for you of think color. why us customers Kind of of to I'd you on customers? next some is this Pro however us help get of That'd impact that's me. about helpful. think this asking over

Patrick Spence

Thanks Eric. Yeah.

and Sonos So and we in creates we we're build fantastic, many We it because super experience. Pro. consumer we've industries, so easy Sonos, but in small take seen like the just reliable to what seen businesses have some a use excited marketplace. these use, things, seeing solution great start to And do sized on to time about is based medium the

Sonos way even -- permissions had in service things do music, been provide to lucky we've of these for and a a that employees, before set choose allows chosen all the businesses things. do monitor have And we we've ability to them of that so like, it been kind the the

And sized way and from businesses. what have it some so getting We And started baked but so a things, start. these to and bring just segment off experience to Pro, it's this in kind medium of the that. on guidance this. we're that we it's and into invested Sonos the we're sure terms like obviously that good a about in, we're really we're pragmatic not or or leverage in, getting anything everything interest -- of learn we've make We're want changing model in we great organic doing small

So we're with very good lot and and businesses beta pleased about the we're the so about been early signs. a working experience that. solution and the We've feeling testing of this,

the And be category professional I going and commercial whole do bring amazing think into can to over experience, at as -- and audio opportunity and especially world we it's the the new gets well. this big this of we what we Sonos really reliability time, to of us simplicity a it think that large

is so new bring seeing And at response this forward good exciting. off, we're this it point. to continuing things space. we've And into looking We're to which kicked

watch for So more opportunity. it's long-term because we great think a

Erik Woodring

for Awesome. guys. Thanks the color

Operator

Next America. of Haas, up Jason Bank is

Jason Haas

Thanks questions. for afternoon. good Hey, taking my

guidance higher a a sounds looks promotional, it you're second little So heavier like also the embeds inventory. maybe like year in getting gross more than the first the versus four of half. Despite you the like talk percentage second on half it the margin about competition point half about

improvement see in that confidence you'll what margin in So the gross half? you back that gives

Eddie Lazarus

in back So we to were the be than front -- half. in expect than promotional we the fully less the half

we seeing to piece first We're supply some to do a And be expect half. So we significant that's going now of to saw in continued that compared the what see improvement. chain it.

the is headwind piece back last going even out the the half. in to basically just is And FX

hit so we've between think things, XX% hit can we And that it those before. we number. And

And think reasonable so target. it's we a place to

Jason Haas

next like if you should we temporary of How had that it continues that cost also to year? Great. in need much meaning in would I come back that correctly. future I think $XX years of I that million is assume And think nature then versus continue, was structural take-outs, out, or called

Eddie Lazarus

Right.

have overlap time. $XX that we One year. that's away OpEx have squared do for that that to this two the to And So sure make get same the is, things we at we our million.

OpEx of some savings roll will that would And that over. be

looking We in it of is same OpEx that the And we'll for But take house sure necessary to a we're were This additional But at some fiscal is get make that to make little steps add XXXX with that do XXXX roll there. over. savings tougher. sure discipline, a won't pivot we'll absolutely us. we our makes operational time, about thinking order and already the next the year. leverage always challenge for year as

at we part said, I And $XX for so no, what already yes XXXX. to do that part the longer million, are we of for as need looking but the term

Jason Haas

it. you. Got makes Thank sense. That

Patrick Spence

Thanks Jason.

Operator

And D.A. the Davidson Tom next question. has Forte,

Thomas Forte

Thanks. Great.

you for follow one prepared your much questions a So And and very other Patrick one lot question I thank had. and up. Eddie, my of Certainly answered remarks.

channel is, to you first an the question to So pandemic consumer like challenges, inventory into an you lean into job, excellent leaning offset did the to DTC. do during have opportunity feel direct

think how should So about that? we

Patrick Spence

are We Tom. DTC, leaning definitely into

of things. reporting, really the sets as those selling way of in in -- I channel to $X existing of some and QX mention base. has doing the is well. this to led at team we of to that You people may our that sell package with well, that started in also work them recall help do And then as DTC we how the use lot look more enormous, the remarks we that is did products our in that. go our Lindsay opportunity to a that shared DTC continuing and to the do how billion how prepared getting I one with after effectively runs And things products, some so think

we in well. benefits, existing And absolutely are as opportunity if see continue so in base. DTC and omnichannel our to, there's we because leaning you there so will, I think But on will much

Thomas Forte

But and the promotional up, in related couple chain for increase might your think we ability more. I there'd to follow queue take little my supply should how impact activity for possibly be to get of no Great. about So gross advantage on margin. and a And improving back then costs?

Eddie Lazarus

going have going as remain the in in quite to have We're to And promotions. many bought anyway, see our bit costs. when standard component will to the Tom. as now, our later we were on, We're Right improvement practice components because that's a prices targeted not pretty much we little higher. so

promotion -- because we're increase about have. chain to going off as they by going going careful those So to to to use such amount to We're strategic I going We're said, the would dramatically that we're to offset targeted going margin we're do. are do target of to going our as -- we're to savings stuff, the we be don't be promote. get supply We're range think to going I increase to gross savings. but

Patrick Spence

Yeah.

seeing never that I And terms XX% there's some we're value our in the of I been in by despite think underscored see the that holding that promotions that's pricing innovation in the to we've customer, that would competitive cases seen legacy of that balance, the likes existing or players environment. up being like promotions with running bringing. to approach right, audio off we've been increase XX%, and market the we're hold Tom, the continue say, share able

positioned so positioned. And on the feel competition issue, are industry we're very where Right good well headwinds but now, feel the front. the we about we big

want innovate innovation. are customers the to for deliver that willing going and products that continues and kind of the be we're that So to company to pay

Thomas Forte

Great. Thanks my for questions. taking

Patrick Spence

Tom. Thanks

Operator

Jefferies. go We'll Brent to next Thill,

Brent Thill

trended Any Thanks Patrick. on to color XXX? How gate outta the your XXX, that the expectation? relative

Patrick Spence

cities, in artists, and Yeah. artists, tour it's in We two I around why And and number able done a have that's right? build frankly, amazing. studios. that's it's the and these X things moment, been Customer big something things we great. me products. and amazing. the expectations, interesting launched this we to And is response industry such again, okay, of we've proves, We're products, We've that innovation for those next media the challenging that had -- strange existing something tale new think a And ahead a why was the little and to this our because is quite it we raising the -- has it's been in because Brent, to with with of them reviews some seen over get see billion saw we It's product. have been and a got of -- a a time, of to impressions bit XX bar is we've fantastic those a like was these to five even something quarter. for why we years, that higher But not expected. on us than one that products, did

saying? And very they're on of Era what's start. the great to moment are The a those products. a media strong fundamentals things response? the off so look I at all think this What the the reviews And customer of like kind are those looking What's like?

Brent Thill

the Eddie, this the then, up can channel now? us, Was did remind consumer And see hold well? what direct of channel Okay. better you you did than as in channel? the to percent And business is that

Patrick Spence

Yeah.

want DTC say in And Brent, in XX%, to at where that it -- I was around we XX% a year, of much -- it we at So this end the of update of doesn't terms once last terms is do year, what's point. so deviate there. that from

and what weakening that which in We seen like that's registration of is -- have we we're watching, there. we are trends, terms cross-channel said,

things of of some do and the the Some to point revenue more restocking Eddie's there. and to with the is channels side

a we the tighter somebody time actually to with thing a that is we have when and lights as product DTC registration it we tighter we So up. -- have from sell call it,

again, which across board challenged, be And so the headwinds. to the down seeing -- but we're registrations think I boils industry

Brent Thill

Thank you.

Operator

Raymond James. [indiscernible], is up Next

Unidentified Analyst

taking for thanks Hey, question. my

a here. couple Just me from

that touch Any firstly, in multi-product to there? formation I'm would the just more macro then further, hoping driving as on in be quarter. color you color are relation you And with sets, see could how further What year So in on household multi-product helpful. just did household linearity? uncertainty, selling you the the get more just formation the you

Patrick Spence

it's been quarter direct the kind to a consumer in We've what area in way our we really to great we're lead that because It's started with of first question focus terms on do and of Yeah. to focused. an able efforts.

there. And QX. multi-product a that household buyers everything to QX, don't little so I quarter we say, terms of and there that with haven't seen in our a strong we saw kind that, general in out think anything of formation more fair it's in we saw what's a think from deviated really -- I

that So add Eddie, I front? don't know if you from anything have to

Eddie Lazarus

No.

the per strategy more household, flywheel continues would just overall, registering I clearly off we're We the We're initially the we're getting reflected adding forces rates, guidance. is in a new down But set and say external looking just to spin. but the repurchase paying us. bit. it that's are the the We're are adding new slowing products households. for And -- the -- for.

Patrick Spence

that focus higher to know continue we'll We well. value lifetime And as we because is NPS is on know higher.

consumer you'll push to we So rest. continue to our around us focus go going to through especially even direct see on and so more this, sets, as with

Unidentified Analyst

any some voice last Okay. Perfect. there? out anything to had I call of know call just results. guys from And terms incremental Sonos' That competition? then out level, one at me, the outstanding last versus makes Anything control -- called sense. a you in progress pretty high

Patrick Spence

Yeah.

got the Continued And make growth reaction good momentum homes. with on exciting our service that to front. Great that terms our working some in team's it better, platform, continues customers. of way NPS, we've even on. stuff new Highest to planned on lead from

comes time with also just team and got chance to intelligence an area a play. just learning So that that spend recently. Obviously I where into is machine some artificial

with thousands has doing so the of, investments But XX of put the on those. -- some XX our team And pretty to I things. probably team voice people, And big team tens a of tech you've we're service everybody we loving together. heard people that a I of have good of that are think, using, that there remind scrappy and our incredible done customers our has darn

plays comes that continues it when the how about overall platform. Sonos good feel the and lead voice it into way to to So assistance on the experience

Unidentified Analyst

so much. guys Perfect. Thank you

Patrick Spence

Thank you.

Operator

[Operator Instructions]

from Tom up follow a take We'll Forte.

Thomas Forte

Great.

Is Apple the buy ones. later sales? front now pay anything a an recently rolled do -- now effort. you later there up follow two So pay financing could to quick stimulate buy out example, As on

Patrick Spence

there ways things at option, in we're particular about are with marketing to pipeline. always We're And are looking our experiment Tom. products, that and but thinking the that selling some not

be just So stay variety on yes, a going to would I learning that. We're tuned say testing of different and things.

Eddie Lazarus

we so that option have we use partner Sonos.com, the for And customers well. do an on as NPL as

Thomas Forte

last then for and for And taking that question thanks Great. question. me,

Salesforce? Are leveraging don't you I resellers? I What's go-to-market you effort, apologize a software-as-a-service if Are this you the On there? you direct think mentioned strategy the did. using and

Patrick Spence

our We're both. installer leveraging We're Yeah. there. of doing right, channel, some out because they're

of our as well them medium sales, small people Some it as own business working have inside focus and customers. on We well.

think our room we long And this kind building so this to of not to up Because and it self-service well. I with think play that think great They term, installer we part lot today. to evolve definitely so with pretty exciting. of previous is But because our channel. out a get the Sonos a think some us a more work we there's of continue there's and on markets all calls, more here, there's a said channel opportunity we're you'll as opportunity there's opportunity as think there's see there we've to installer for lot that's in

is good that's promising for so us. another why Pro reason that's something So

Thomas Forte

you. Great. Thank

Patrick Spence

Thanks Tom.

Operator

to We'll Thill. Brent go back

Brent Thill

generally Like, Thanks. where Patrick, areas, think a to? kind are getting there's dollars held consumer up do into feel general? of maybe wallets flowing are kind other just sense just this that is do what's going think experiences you the you of in your you more or of in the stall and

Patrick Spence

do share changing get even on where discounts sit are that we where competitors audio I doing, and Brent, to those These market market those -- are it's now from see. get seat my coming sure, is for more a know perspective, And right everything right? not more unprecedented focused numbers that moments okay, share not. I you All from you in they're even any

of and and products. delivering value expect So we're all mindful for the to, money we're sure we that that that making those still

not those and I I've that am out going that But expert I in kind on now. spending see part expert that an audio people now there. seen the an towards macro economy would of I are not the say, I'm is are industry on other I of right it in based things suspect stuff. macro right where or again, the dollars what experiences that economy and the side,

what or just people and macro that happening -- some we maybe on I we're restaurants to continue And the we a we to trigger how we that we you. focused in -- for that on it, thinking will what perhaps so sure the in yeah, make -- we hard travel I the everything of think for with have or But able splash space. created spending of we the some me say, I'm yeah, that such really audio, that it's to picture. dollars interesting weren't that, we that with do what's specifically think it's because win people Era, earmarking around were did, pulled and name audio

that's so And I hopefully think that's helpful. --

Brent Thill

in And up, spoken about I a know opportunity. quick the home, you've follow just the the past beyond auto

You've there just Can what refreshed you're any home? opportunities. -- other the got maybe a view update outside many on -- seeing you

Patrick Spence

Yeah.

I audio well, now in continue the from as think, -- perspective. of home bucket right outside kind an the same So it's

look we speaker home down would versus for home there's is about nothing year-over-year. be instance, now. the I which say as share the similarly, behaving inside right really to look So different outside They at

the those home home the right as we have of the same the that we speaker across of headwinds kind so and and portables, in different And categories have components. now theater well

audio So that's the right industry. we're facing what across

Brent Thill

Thank you.

Patrick Spence

Thanks Brent.

Operator

are to the back speakers remarks. there or for questions. this additional at our conference I'll no time, further hand any closing Everyone

Patrick Spence

Definitely, joining facing investing to three to actions need everybody set in and invest sometimes we're cycles. that Thanks years, able longer out two ensure a XXXX, I anywhere in today. from continue sheet, thanks we talked for to remind something we have the to development that fiscal That's us taking profitable innovation. industry to, as into Lisa, the takes that categories headwinds, and remain we we are everybody pre-revenue. about strong balance would product in be our

never we've faced term really also never we headwinds exciting focused industry of had so product have. kind we've -- never more roadmap. But short And the a

going will in coming we company how we we focused period. what future, profitable have build sustainable, excited everyone. navigate to So for continue this a you We're we're on and the to about stay the long-term. Thank

Operator

participation. would conclude you for today's like to We does thank conference. That all

You disconnect. may now

Sonos (SONO) 10 May 232023 Q2 Earnings call transcript